Valdez Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value. Valdez's O property factor is:

Question

Valdez Corporation,a calendar-year taxpayer,owns property in States M and O.Both M and O require that the average value of assets be included in the property factor.M requires that the property be valued at its historical cost,and O requires that the property be included in the property factor at its net depreciated book value.   Valdez's O property factor is:

Quizplus · Accepted Answer

Valdez's property in State O is included in the property factor at its net depreciated book value. 
Assuming the net depreciated book value is lower than the historical cost of the property, this would result in a lower property factor than if it were valued at historical cost. 
Therefore, the property factor for Valdez's O property would be lower than if it were valued at historical cost, but higher than if it were not included in the property factor calculation at all. 
Based on this reasoning, the closest option is B) 37.2%.

Valdez Corporation,a Calendar-Year Taxpayer,owns Property in States M and O